VAT a vicious cycle that turns us all into losers

The poor can be forgiven for assuming they pay little by way of taxation. After all, they are so often in receipt of benefits from a state that trumpets its ‘generosity’ that they reasonably believe they are, even must be, very modest contributors to the Exchequer.

On the contrary, the Institute of Economic Affairs (iea) has calculated in a new report that the poorest one-fifth of the population pay out 37 per cent of their income (including state benefits) in taxes.

That is a higher proportion than the rich or that elusive group, the squeezed middle.

And that one-fifth includes most pensioners and the unemployed. The result of this burden on the poor is that the state has to keep pushing up benefits to prevent them from hitting rock bottom.

This in turn has to be added to the nation’s tax bill, which was a reason for the poor’s plight in the first place.

Call this insane or merely silly, it is nevertheless a fact of life, and not a new one.